Title: Selling on a marketplace with deceptive counterfeits: agency or wholesale?

Authors: Qin Geng

Addresses: Department of Business Administration, Kutztown University of Pennsylvania, Kutztown, PA 19530, USA

Abstract: This paper examines a supply chain comprising an online marketplace retailer, an authentic manufacturer, and a counterfeit manufacturer. The counterfeit manufacturer sells its products through agency selling. The authentic manufacturer chooses between wholesaling and agency selling where the revenue share is stipulated by the retailer. I study how the presence of counterfeits and how a retailer's profit maximisation objectives impact the authentic manufacturer's choice of contracts, decisions, and profits. I find that when the number of committed consumers to authentic products is low, the cost of counterfeits is low, the perception of counterfeits among uncommitted consumers is high, and quality is cost-efficient, wholesaling tends to be a better choice for the authentic manufacturer. However, if the retailer factors in revenue from counterfeits, the role of wholesaling in ensuring authenticity may be significantly diminished.

Keywords: supply chain; counterfeits; agency selling; wholesale; revenue sharing.

DOI: 10.1504/IJISM.2025.147728

International Journal of Integrated Supply Management, 2025 Vol.18 No.1, pp.54 - 86

Received: 15 Aug 2024
Accepted: 17 Mar 2025
Published online: 28 Jul 2025 *

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